Pakistan finally concluded bidding for the privatization of its loss-making national flag carrier, Pakistan International Airlines (PIA), with the Arif Habib consortium emerging as the winner after a second round with a Rs135 billion ($482 million) bid for a 75% stake in the national carrier.
Businessman Arif Habib’s consortium also includes Fatima Fertilizer Co., Fauji Fertilizer Co. and AKD Group.
PIA, once among Asia’s best, was saddled with over $2.8 billion in debt, mismanagement, legacy of bureaucratic stagnation for decades. Then, the 2020 pilot licensing scandal triggered international flight bans, however, the bans were recently lifted, significantly boosting the airline’s privatization prospects.
The transaction, which surpassed the government’s minimum price of Rs 100 billion, marks a successful conclusion to an effort to privatize the airline that had stalled repeatedly since the 1990s. The sale itself is a central pillar of Pakistan’s broader economic reforms, tied directly to a crucial loan program with the International Monetary Fund. It’s a deal focused on injecting fresh capital into a public institution and stopping the drain on taxpayer money.
Key Highlights
- Winning Bid: Rs135 billion (approximately $482 million) for a 75% stake in PIA.
- Consortium Lead: Arif Habib Corporation Limited, alongside Fatima Fertilizer Company Limited, City Schools (Private) Limited, and Lake City Holdings (Private) Limited.
- Valuation: The overall value of PIA is assessed at Rs180 billion, with the winning bid exceeding the adviser’s valuation of Rs131 billion.
- Investment Focus: Most of the proceeds, Rs125 billion, will be immediately reinvested into the airline to support its turnaround.
- Future Fleet Target: The new owners plan to expand the current fleet of 18 planes to 38 in the first phase, eventually targeting 65 aircraft.
PIA Privatization Auction: Key Bids by Consortiums
| Bidder | Round | Bid Amount (in Billion Rs/PKR) | USD-Equivalent | Outcome/Context |
| Arif Habib Consortium | Round 1 (Opening) | 115.0 | $410 million | Highest initial bid; set the base price for the second round. |
| Lucky Cement | Round 1 (Opening) | 101.5 | $362 million | Above the reference price of Rs100 billion. |
| Airblue | Round 1 (Opening) | 26.5 | $95 million | Below the reference price; Airblue exited the race after this round. |
| Lucky Cement | Round 2 (Final Phase) | 134.0 | $478 million | Highest counter-bid before the final winning offer. |
| Arif Habib Consortium | Round 2 (Final Phase) | 135.0 | $482 million | Winning Bid. Lucky Cement conceded after this offer. |
Highly Competitive Auction
The bidding process, broadcast live for maximum transparency, quickly evolved into a head-to-head contest. Pre-qualified bidders, including Lucky Cement and private airline Airblue, initially submitted their offers. Airblue dropped out early, but the battle intensified between the Arif Habib consortium and Lucky Cement.
The initial reference price was Rs 100 billion, and the base price for the open auction was set at Rs 115 billion – the highest bid from the first round.
Both parties engaged in rapid-fire increments. Ultimately, after Lucky Cement raised its bid to Rs 134 billion, the Arif Habib consortium countered with the final winning offer of Rs 135 billion. The successful conclusion was hailed by economist Khaqan Najeeb, who noted, “It is a very good start that after 19-20 years, we have successfully privatized a major institution.”
New Ownership, New Ambitions
For years, PIA was constrained by its crippling debt and political meddling. The government sweetened the deal for investors by reducing the debt, offering protection against certain claims, and exempting new aircraft purchases from sales tax. The new owners have immediate, aggressive plans for fleet modernization and expansion, which is essential to achieving economies of scale.
Business owner Arif Habib expressed optimism about the future and his commitment to the national carrier. He stated, “PIA is our national institution… The national airline has witnessed days of glory and was once ranked number two in the world. All its employees are very competent.”
When asked about his vision, Habib provided clear expansion goals: “Initially, we plan to expand the fleet to 38 aircraft in the first phase, then to 65, depending on demand.” He also reassured the current workforce, promising that “Employment opportunities will grow as we expand… The existing experienced employees will also get opportunities… When all necessary capital investment is made, they will perform well.”
Prime Minister Shehbaz Sharif reflected the national mood on social media, concluding, “This is work in progress and we will continue our hard work with even greater vigour and perseverance in the days ahead to build a brighter future for our nation.” The successful deal now puts the focus on the new management’s ability to leverage capital for a true technological and operational overhaul.
Finance Minister Muhammad Aurangzeb, celebrating the process’s transparency, lauded the involvement of local conglomerates, saying the successful bidder would take the carrier “not only to where we were, but where we need to be in the comity of nations.”